Chapter -3 Federalism: Roots, Court Decisions, and the Modern Intergovernmental System
Roots of the Federal System
The United States adopted a federal system to address weaknesses under the Articles of Confederation, combining national and state governments that derive their authority from the people.
Three basic constitutional forms to compare:
Federal system: national and state governments share power and derive authority from the people.
Confederation: national government derives its powers from the states (a league of independent states).
Unitary system: local/regional governments derive authority from a strong national government.
The Framers chose federalism to avoid concentrating power in a single center while avoiding the inefficiencies of a loose confederation.
Key structural features of federalism:
National powers (enumerated powers) derive from Article I, Section 8 of the Constitution, including:
Coin money
Conduct foreign relations
Provide for an army and navy
Declare war
Regulate interstate commerce
Necessary and Proper Clause (elastic clause) broadens Congress’s ability to enact laws needed to exercise its enumerated powers; these are known as implied powers.
The Constitution also grants the national government the exclusive right to collect duties and excises as a means of revenue to avoid finance problems seen under the Articles.
Supremacy Clause (Article VI): the Constitution, federal laws, and treaties are the supreme law of the land; national law overrides state law in conflicts.
The Tenth Amendment defines reserved powers: powers not delegated to the United States nor prohibited to the states are reserved to the states or the people.
Powers under the Constitution can be categorized as:
Enumerated (express) powers for the national government (e.g., coin money, foreign relations, war, interstate commerce).
Implied powers derived from the enumerated powers + Necessary and Proper Clause.
Reserved powers for the states (via the Tenth Amendment).
Concurrent powers shared by the national and state governments (e.g., taxation, borrowing money, establishing courts, spending for the general welfare, regulating commerce within a state, chartering banks).
Denied powers (to both levels or to one level):
Examples include prohibitions on passing bills of attainder or ex post facto laws, and prohibitions on granting titles of nobility.
The Constitution prohibits both levels from taking actions that infringe constitutional rights.
Intergovernmental relations: mechanisms to resolve interstate issues and facilitate cooperation among states, including:
Full Faith and Credit Clause (Article IV, Section 1): requires states to recognize public acts, records, and judicial proceedings of other states.
Privileges and Immunities Clause (Article IV, Section 2): guarantees citizens of each state the same rights as citizens of others.
Extradition Clause (Article IV, Section 2): requires states to extradite criminals to states where they have been convicted or are to stand trial.
Interstate compacts: contracts between states that carry the force of law; over 200 exist today (e.g., Drivers License Compact).
Local governments:
No express power in the Constitution; Dillon’s Rule (1868) holds that local governments have no inherent sovereignty and are created/authorized by state governments.
Local governments require charters issued by the state; charters outline basic policies and procedures and require state approval to amend.
Types of local government structures include:
Counties (the basic administrative unit; in some states called parishes or boroughs)
Municipalities (cities designated by population density and function)
Towns (smaller communities with varying state definitions)
Special districts (restricted to specific functions like libraries, water, parks; can cross jurisdictional lines; often independently funded)
There are more than 90,000 governments in the United States; the largest share are local governments, especially special districts.
The Supreme Court under John Marshall: Defining National Power
The Marshall Court (1801–1835) substantially defined federalism by interpreting the supremacy and commerce clauses.
McCulloch v. Maryland (1819): affirmed national power and rejected state taxation of a federal bank.
Facts: Congress chartered the Second Bank of the United States (1816); Maryland taxed non-M Maryland banks, including the federal bank, to drive it out of business.
Decision: Congress had authority to charter a bank via enumerated powers (tax, borrow, regulate currency) and the Necessary and Proper Clause; Maryland’s tax was unconstitutional because the national government is supreme in its operations; the power to tax involves the power to destroy; the state tax violated the Supremacy Clause.
Significance: established the doctrine of implied powers and a strong national government; enabled broad use of federal action to achieve national ends.
Notable consequences: prevented states from nullifying federal instruments located within their borders and protected federal programs from state interference.
Gibbons v. Ogden (1824): broad interpretation of the Commerce Clause.
Question: Does Congress have the power to regulate interstate commerce beyond direct, tangible goods, including commercial activity?
Decision: Yes; Congress has expansive power to regulate interstate commerce, including navigation and commerce activities, subject to constitutional limits.
Significance: established expansive federal authority over interstate economic activity; laid groundwork for later federal regulation of national economy.
Barron v. Baltimore (1833): regarding incorporation of the Bill of Rights to the states.
Decision: The due process clause of the Fifth Amendment did not apply to state actions; the Bill of Rights restrained only the national government.
Significance: reinforced the idea of dual federalism early on, limiting national protections to the federal arena.
Emergence and Decline of Dual Federalism
Dual federalism (layer-cake federalism): separate and equally powerful national and state governments with distinct spheres of authority.
Barron v. Baltimore (1833) reinforced the idea that the Bill of Rights applied only to the national government, not to the states.
Dred Scott v. Sandford (1857): Court narrowed the scope of national power while enhancing states’ powers; slaves were treated as property; Congress lacked authority to ban slavery in the territories.
Nullification and state sovereignty debates:
John C. Calhoun’s nullification theory (1820s–1830s): states could declare federal laws void; if a state contested a law, it could call a convention, and if 3/4 of the states ratified, Congress could be required to allow the action; otherwise, secession.
Tariff of Abominations (1828) sparked South Carolina’s resistance; nullification arguments framed the state-federal tension leading up to the Civil War.
Civil War and Reconstruction transformed federalism:
The war and postwar amendments (Thirteenth, Fourteenth, Fifteenth) expanded national power and redefined state roles.
The Court began to accept national regulation of railroad construction, canals, and eventual economic regulation; by the 1880s–1890s, Congress increased its regulatory authority (e.g., Sherman Anti-Trust Act, Interstate Commerce Act).
Despite reforms, some limits persisted: e.g., in 1895, the Supreme Court held that Congress could not prevent the sale of sugar refining companies because manufacturing was not commerce.
The long arc: from dual federalism toward a more integrated national role in economic and social policy, with constraints and ongoing debates about state sovereignty.
Amending the National–State Relationship
a) Sixteenth Amendment (1913)
Granted Congress the power to levy and collect taxes on incomes without apportionment among the states, significantly expanding federal revenue capacity and national policy reach.
Significance: money as power; enabled broader federal action in redistribution and national programs.
b) Seventeenth Amendment (1913)
Direct election of U.S. Senators by the people, removing senators from state legislatures.
Consequences: weakened states’ direct control over Federal legislation via the Senate; reduced states’ protection in Congress; contributed to stronger national government influence on policy.
Cooperative Federalism: The Growth of the National Government
The shift from layer cake to marble cake federalism (cooperative federalism) describes intertwined relations among national, state, and local governments.
New Deal era (1930s) as the turning point:
Federal government implemented relief, recovery, and reform programs to combat the Great Depression (1933 onward).
Major programs and agencies included:
Federal Housing Administration (FHA)
Civilian Conservation Corps (CCC)
Agricultural Adjustment Administration (AAA)
National Recovery Administration (NRA)
Court-packing plan (1937) aimed to expand the Supreme Court to gain support for New Deal programs; ultimately backfired politically, but the Court shifted to uphold broader federal power in 1937–1938.
Subsequent acts legitimized broader federal power in areas like labor, wage standards, and agricultural subsidies: NLRA (1935), FLSA (1938), AAA (1938).
Federal grants as a primary tool for intergovernmental influence:
Categorical grants: funds for specific purposes with tight conditions; often require matching funds and can be used to coerce states toward national priorities; popular in funding programs like Medicaid (roughly 15% of state budgets) and other environmental, economic development, and law enforcement programs.
Block grants ( Reagan era, 1980s): consolidated several categorical programs into fewer, more flexible grants with general guidelines; favored by governors for increased state discretion.
Programmatic requests (earmarks): funds designated for specific projects within a state or district; historically exploded in the late 1990s–early 2000s; controversial due to potential lobbying and lack of competitive awarding.
Unfunded Mandates Reform Act (1995): sought to curb Congress from imposing costly federal requirements on states without funding; enforcement challenges persist.
No Child Left Behind Act (NCLB, 2001): federal education standards and testing requirements; criticized for imposing costs on states without adequate funding; a prominent example of the preemption tension in progressive federalism.
TANF (1996): Temporary Assistance for Needy Families; replaced AFDC; devolved more welfare administration to states; a hallmark of the devolution revolution.
No comprehensive federal funding equals no compliance: funding flows and program requirements can create dependency on federal dollars; states balance budgets but must adjust when federal revenues decline.
A common analytic frame: the federal budget is used to influence state and local policy, often by tying funds to national standards or objectives, and by shaping policy direction through grant design.
Local and State Governments in the Federal System
Dillon’s Rule (1868): local governments have no inherent sovereignty; they must be authorized by state governments via charters.
Local government structures:
Counties: basic administrative units; in some states called parishes or boroughs.
Municipalities: city governments arising from population density and urbanization.
Towns: smaller communities; classifications vary by state.
Special districts: numerous and restricted to specific functions (libraries, water, parks, etc.); may cross local boundaries; may levy fees or rely on state/city funding; school districts are the most common type of special district.
The number of governments in the United States is very large (over 90,000), with the vast majority being local; the most common form is the special district.
Dillon’s Rule and local-charter development shape which powers localities can exercise and how they interact with state authority.
Intergovernmental Relations and the Modern Era
Intergovernmental cooperation is required for many public policies and programs (e.g., stimulus programs like the American Recovery and Reinvestment Act).
The Full Faith and Credit Clause and interstate relations enable multistate cooperation and consistency in public acts and contracts across states.
Intergovernmental devices include intergovernmental compacts and multistate agreements that enable unified policy action across borders.
The modern era features a mix of coercive and cooperative federalism (progressive federalism): when national standards are possible, there is a push for national action; when national action stalls, states can act as laboratories of democracy, with federal support or tolerance.
Progressive federalism has included examples like allowing California to set stricter emissions standards than federal standards, or the Obama administration encouraging states to pursue immigration reforms and other policy innovations.
Critics caution that a “free-for-all” approach can cause inconsistent policy across states and complicate nationwide governance; supporters emphasize experimentation, innovation, and tailored solutions.
The Judiciary as Arbiter of Federal–State Conflicts
The U.S. Supreme Court acts as the umpire in federal–state conflicts, with shifts in emphasis across administrations and eras.
The Rehnquist Court (1980s–1990s): more skeptical of broad federal regulation in some areas; emphasized states’ rights and limited Commerce Clause interpretation (e.g., U.S. v. Lopez, 1995) where the Court held that possession of a firearm in a school zone did not fall within Congress’s commerce power.
The Roberts Court (2005–present): initially cautious but later engaged in high-profile federalism cases; decisions around immigration, health care, and preemption have shown nuanced takes that often protect liberties while not uniformly favoring one level of government.
The jurisprudential trend has been complex: the Court’s federalism decisions are not purely pro-national or pro-state but are framed as protecting individual rights and ensuring constitutional balance, with many decisions hinging on commerce power, taxation, and core national interests.
Toward Reform: Balancing National and State Power
The Price of Federalism (1995) by Paul E. Peterson:
Redistributive policies (e.g., health care, welfare) benefit from national capacity and uniform standards.
Developmental policies (infrastructure, local development) are better managed by states closer to the people and better suited to address regional needs.
Historically, policy responsibility has not perfectly matched this split; federal power has often expanded redistributive activities through national funding and mandates, while developmental roles have remained more state-driven but still influenced by federal funds.
Progressive Federalism (Obama era): a pragmatic stance that blends coercion and cooperation, using federal standards where feasible but allowing state experimentation and leadership when national consensus is elusive.
Examples include accommodating state-level health reform and environmental standards, or enabling state action in immigration policy when Congress stalls.
Critics argue this may create a “laboratories of democracy” with uneven policy outcomes; proponents argue it enables policy innovation and faster responses to local needs.
Critical Themes and Review Points
The national government has both enumerated and implied powers; the states retain reserved powers, with concurrent powers shared between levels.
The supremacy of national law is a defining feature, but the balance of power has shifted dramatically over time due to historical events, constitutional amendments, economic needs, and Supreme Court interpretations.
Local governments, though numerous and diverse, derive their authority from the states; Dillon’s Rule frames how they operate within the larger federal framework.
The federal budget and grants (categorical, block, programmatic) are central tools for shaping state and local policy, with debates over funding levels, mandates, and the use of earmarks.
The evolution from dual federalism to cooperative federalism reflects changing views about the best allocation of policy responsibilities and the degree of centralized authority needed to address national challenges.
Contemporary debates (progressive federalism, preemption, and national standards) reflect ongoing tensions between national uniformity and state sovereignty, with implications for policy implementation, accountability, and citizen outcomes.
Learn the Terms (selected definitions derived from the notes)
federal system: System in which the national government and state governments share power and derive authority from the people.
confederation: A system where the national government derives its powers from the states; a league of independent states.
unitary system: A system where local and regional authorities derive authority from a strong national government.
enumerated powers: The powers specifically listed in Article I, Section 8 of the Constitution (e.g., coin money, conduct foreign relations, declare war).
elastic clause / necessary and proper clause: Grants Congress the power to enact laws necessary and proper for carrying out its enumerated powers and other duties; gives rise to implied powers.
implied powers: Powers derived from the enumerated powers and the necessary and proper clause.
Supremacy Clause: The Constitution, federal laws, and treaties are the supreme Law of the Land; state laws conflict with federal laws, federal law prevails.
Tenth Amendment: The powers not delegated to the United States are reserved to the states or to the people.
concurrent powers: Powers shared by the national and state governments (e.g., tax, borrow money, establish courts, spend for general welfare).
reserved powers: Powers reserved to the states by the Tenth Amendment (e.g., health, safety, morals; election administration).
full faith and credit clause: States must recognize acts, records, and judgments of other states.
privileges and immunities clause: Ensures that citizens of each state have the same rights as citizens of other states.
extradition clause: States must return criminals to states where they have been convicted or are to stand trial.
interstate compacts: Contracts between states with the force of law, used to address multistate policy concerns.
Dillon’s Rule: Local governments do not have inherent sovereignty and must be authorized/chartered by state governments.
dual federalism: The historic system in which state governments and the national government exercise separate, equally powerful powers (layer-cake federalism).
cooperative federalism: The modern system where national, state, and local governments work together (often described as marble-cake federalism).
progressive federalism: A pragmatic approach viewing federal-state relations as both coercive and cooperative, varying by issue and political context.
preemption: The national government can override state or local actions in certain policy areas.
earmarks / programmatic requests: Federal funds designated for specific projects within states/districts to direct policy outcomes.
unfunded mandates: Federal requirements imposed on states with insufficient or no funding to cover the costs.
block grants: Large, flexible federal grants to states with general spending guidelines, intended to give states more discretion.
categorical grants: Federal funds for specific purposes with tight conditions and often matching requirements.
New Deal: A set of federal relief, recovery, and reform programs initiated by President Franklin D. Roosevelt beginning in 1933, expanding the national government’s role in domestic policy.
TANF: Temporary Assistance for Needy Families; replaced prior welfare programs and devolved more authority to the states.
No Child Left Behind (NCLB): Federal education standards and testing requirements; often cited as an unfunded mandate or costly federal requirement onto states.
Key Figures and Cases to Remember (quick reference)
McCulloch v. Maryland (1819): upheld federal power to charter a bank; asserted implied powers and supremacy of national law.
Gibbons v. Ogden (1824): broad interpretation of the Commerce Clause; national regulation of interstate commerce.
Barron v. Baltimore (1833): limited applicability of the Bill of Rights to the federal government; early limit on federal reach.
Dred Scott v. Sandford (1857): legislative and judicial limits on national power; slavery and citizenship issues tied to states’ rights.
United States v. Lopez (1995): limited Congress’s Commerce Clause power; federal gun regulation near schools deemed not substantially related to interstate commerce.
United States v. Morrison (2000) and NFIB v. Sebelius (2012) (brief references in the broader federalism discussion): illustrate ongoing debates about Commerce Clause reach and federal statutory power over health care and other policies.
Arizona v. United States (2012) – Federalism in Immigration Policy (example from the transcript)
Context: Arizona enacted a restrictive immigration law increasing state enforcement powers.
Supreme Court outcome: the Court struck down provisions that made illegal immigration and employment violations crimes under state law; struck down authority for arrestees to be detained without warrants in some contexts; upheld a provision requiring verification of citizenship for lawfully detained individuals.
Principle: federal law is supreme in matters of immigration; states cannot unilaterally enforce immigration policy beyond federal statutes, although some limited state authority over verification can remain compatible with federal law.
Relevance to federalism: reinforces the supremacy of federal power where it overlaps with national immigration policy, while sparking debates about the proper balance of power and the role of states in enforcement.
Connections to Broader Themes and Real-World Relevance
The evolution of the federal-state relationship reflects enduring tensions between national uniformity and state experimentation, with real-world consequences for:
Education policy and funding (NCLB, TANF, Medicaid)
Environmental and health standards (federal standards vs state experimentation)
Immigration policy and enforcement
Taxation, welfare, and social programs
Federal budgetary leverage via grants and mandates
The federal system shapes daily life through differences in state laws (marriage age, death penalty, education standards) while maintaining national consistency on core constitutional principles and federal standards.
The judiciary continues to function as the arbiter of federal–state conflicts, with varying interpretive approaches across different eras (Marshall, Rehnquist, Roberts) shaping the balance of power and the scope of federal action.
Practice Questions (from the chapter’s Critical Thinking/Review sections)
What kinds of events appear to catalyze changes in the federal system? Why do some changes seem more definitive than others?
Between which layers did the most change occur as federalism evolved? Why was that change particularly decisive?
How have changes to the federal system affected ordinary citizens in terms of policy delivery and daily life?
How do you assess the trade-off between national standards and state autonomy in the context of progressive federalism?
Quick Reference: Selected Figures and Facts
More than 90,000 governments exist in the United States, with local governments comprising the majority; special districts are the most common form of local government.
The federal budget uses grants to influence state and local policies (categorical grants, block grants, programmatic requests); unfunded mandates remain a policy concern.
The modern era features a blend of coercive and cooperative federalism, varying by policy area and political climate.
The Lives of key terms and concepts in this chapter are summarized at the end of the chapter’s Review; use them to test your understanding of federalism.
Summary Takeaway
The federal system in the United States has evolved from a strict dual federalism to a highly collaborative, often coercive, cooperative federalism, shaped by constitutional design (enumerated/implied powers, supremacy, reserved powers), landmark court decisions (Marshall era), amendments (Sixteenth and Seventeenth), and transformative policies (New Deal, Great Society, Progressive Federalism).
The judiciary plays a critical and ongoing role in determining the balance of power between national and state governments, with modern decisions continuing to calibrate the reach of federal authority in areas like immigration, health care, education, and environment.
Policy tools such as grants, mandates, and regulatory preemption continue to define how the federal government influences state and local policy, while debates about appropriateness, funding, and state autonomy persist in the 21st century.